Against the US dollar sterling started the day fairly flat before strengthening in the afternoon. Consumer Price Index figures released today will show investors how the price of goods and services purchased by consumers has changed in the past month. Expectations are for it to be higher than hoped because of the high oil price.

The euro had a very poor start to the day with Spain's benchmark 10 year bond yield breeching the 6% level yesterday as fear was the main driver in the market in early morning trading. The Eurozone trade balance figures were also significantly worse than the markets had expected. The euro then recovered and staged a rally in the afternoon against most of its major counterparties. Data to be released today will show the sentiment of institutional investors to the Eurozone. Today and on Thursday we have debt issuances by the Spanish government and the success of these fund raisings will have a major influence on where to next for the euro. Volatility will be high.

The US dollar had a mixed day yesterday, starting strong against the majority of currencies before weakening in the afternoon. Better than expected monthly core retail sales and retail sales data boosted the markets confidence. However, poor figures from the Empire State manufacturing index were also released yesterday and the Treasury International Capital data highlighted there had been significantly less foreign investment in long-term securities than the markets had predicted. Housing data is the main release on the agenda today with the figures outlining the number of new residential building permits issued during the previous month.

Elsewhere, the Japanese yen was strong in the morning due to its safe haven status before weakening off in the afternoon. China announced that it will allow its currency (the RMB) to fluctuate up and down by 1% against the USD compared to the 0.5% that has been in place since 2007. The minutes from the Reserve bank of Australia's last policy meeting were released late last night and the Bank of Canada interest rate decision is also announced today which is widely expected to remain at 1%.